Why do you have your card?

Many of us have credit cards and use them in different ways. Some people keep them just for emergencies, some use them for convenience and pay off what is owed in full each month and others use them as a loan. It can be tricky though, knowing when the best time is for repaying the card.

Repayment Options

Paying back everything that you owe on your payday loan each month is the cheapest way to run a credit card. Most have no other fees and so if you pay back everything when you get your statement, you will not be paying out anything but you will have the convenience of interest free credit on your spending during the month. Although this sounds like a great idea and it is the cheapest, it can work against you if you are trying to get other loans or credit cards. Some lenders do not want to see you paying back in full as they will not make money out of you and so will be less likely to lend to you. Others will see it as good discipline and are more likely to lend. It is likely that credit card and overdraft applications are probably the ones most likely to be influenced by this, as they make money from you not paying back quickly, when most other loans have a repayment schedule that you are required to stick to.

Outstanding Options

If you have outstanding debt on your credit card and am thinking about paying back then this may not be a straightforward decision. For some they would just think you should pay as much off as you can; as quickly as you can as that will be the cheapest way to clear the debt. Although this is true, it is not always a realistic proposal for everyone.

Pressure

Sometimes putting pressure on yourself to pay back a debt quickly can lead to a lot of stress and it may mean going without paying in other areas. If you have bills, rent or mortgage and other expenses to pay, you will need to prioritise your spending. It could be more important to pay that electric bill, so that you do not get cut off or buy food for the week than to pay some money off the credit card. Therefore deciding when to pay it back and how much to pay back may not be a simple decision.

Left Over Money

It is often the case that we decide that we will use the money that we have left just before pay day to pay off debts. This can be a good idea, but often we will spend all the money that we have available and then we need more because we can see that it is there. This means that there may never be any left at the end of the month. It can be wise to therefore pay a bit off when you get paid and have plenty of money to be able to do so. Even if it is just a small amount of money it will start to whittle down what you owe and it will add up and really start to make a difference.

Paying Debt Back

Whether you decide to pay back large or small chunks of money and how long you take will depend a lot on how much you owe and how much spare money you tend to have. It is wise financially to try to pay it back as quickly as you can so that you pay less interest. However, you do need to think about whether this will suit you and your lifestyle. Consider how much stress the debt is causing you and how much stress you would feel by paying it off and having to go without in other areas. Try to get a balance, so that you pay some off each time you get paid, but you do not pay off so much that you have to go short in other areas. It could be worth thinking of ways that you can increase your income so that you can afford to pay back more without going short elsewhere. You might be able to get more money for the work you already do or fid some additional work to make money. You might even be able to sell some things to raise more.